8-K: Stardust Power Secures North American Lithium Supply

Stardust Power Inc. has entered a non-binding Letter of Intent with Prairie Lithium for the supply of 6,000 metric tons per annum of lithium carbonate equivalent in the form of lithium chloride.

Summary

• Stardust Power Inc. executed a non-binding Letter of Intent (LOI) with Prairie Lithium Limited for the supply of 6,000 metric tons per annum (mtpa) of lithium carbonate equivalent (LCE) in the form of lithium chloride (LiCl).
• The lithium chloride will be sourced from the Prairie Lithium Project in Saskatchewan, Canada, and will serve as feedstock for Stardust Power's lithium processing facility in Muskogee, Oklahoma.
• Initial deliveries are scheduled to commence as early as 2027, with volumes scaling up to 6,000 mtpa, and the potential for additional volumes.
• The agreement outlines an initial six-year term, with two additional six-year extension options at Stardust Power's discretion, providing up to 18 years of secure feedstock supply.
• Feedstock will be delivered to the Port of Muskogee's Free Trade Zone, offering strategic access to established water, road, and rail networks, along with potential tariff exemptions and reduced import duties.
• Prairie Lithium's Preliminary Economic Statement identifies up to 17,000 mtpa of production capacity from its project.

Sentiment

Score: 8

Explanation: The non-binding Letter of Intent for a significant lithium feedstock supply is a strong positive step, de-risking operations and opening financing avenues, despite the preliminary nature of the agreement.

Positives

• Secures a significant source of near-term feedstock (6,000 mtpa LCE) for the Muskogee facility, foundational for Final Investment Decision (FID) and major construction.
• Strengthens Stardust Power's commercial position, unlocking access to new financing avenues, including project-level debt and equity.
• Accelerates the business model, strengthens customer engagement, and further de-risks the development of Phase 1.
• Preserves flexibility for future phases to incorporate multiple chlorides as production scales, leveraging the central refinery's design.
• Utilizes the Port of Muskogee's Free Trade Zone, offering potential advantages such as tariff exemptions and reduced import duties.
• Aligns with the commitment to a secure and sustainable North American supply chain for critical minerals.
• Demonstrates strong operational execution and clear momentum with permitting in advanced stages, ground broken at Muskogee, and an initial offtake agreement already signed.

Negatives

• The agreement is non-binding and remains subject to the negotiation and execution of a definitive agreement by the parties.

Risks

• The non-binding nature of the Letter of Intent means a definitive agreement may not be reached or may differ from current terms.
• Macroeconomic conditions, inflationary pressures, and changes in interest rates could impact project financing and operational costs.
• Supply chain disruptions could affect the timely delivery of feedstock or equipment.
• Evolving consumer demand, competitive and technological developments in the lithium market.
• Regulatory or legal changes, including environmental regulations, could affect operations or project timelines.
• Potential litigation exposure and cybersecurity threats.
• Fluctuations in foreign exchange rates, particularly between USD and CAD, could impact costs and revenues.

Future Outlook

Stardust Power is eyeing a Final Investment Decision (FID) and the start of major construction for its Muskogee facility. The agreement is expected to accelerate its business model, strengthen customer engagement, and de-risk Phase 1 development. The company plans to incorporate multiple chlorides in future phases as production scales and continues to work with various producers and developers to establish itself as a critical hub in North America's lithium supply chain. Stardust Power is well-positioned to capitalize on the growing demand for domestic supply and refining of critical minerals.

Management Comments

• Pablo Cortegoso, Chief Technical Officer and Co-Founder of Stardust Power, stated: "Securing reliable, high-quality feedstock is critical to scaling our lithium refining operations. Prairie Lithium is a valuable source that aligns with our commitment to a secure a sustainable North American supply chain. This Agreement strengthens our ability to meet growing demand while maintaining operational efficiency."
• Paul Lloyd, Managing Director of Prairie Lithium, commented: "We are proud to partner with Stardust Power to supply high-quality lithium feedstock for the U.S. market. It highlights the value of cooperation between trusted strategic allies in securing a clean energy supply chain and demonstrates the strength of Prairies resources and our commitment to supporting scalable, sustainable lithium production critical to North Americas energy security."

Industry Context

This announcement occurs within a broader industry trend of increasing demand for critical minerals, particularly lithium, driven by the global transition to clean energy and electric vehicles. There is a significant focus on establishing secure and sustainable North American supply chains to reduce reliance on foreign sources. Stardust Power's strategy to build a central refinery capable of processing multiple lithium chloride inputs positions it as a key player in bolstering domestic energy security and refining capabilities.

Stakeholder Impact

• Shareholders: Potential for long-term value creation due to de-risked operations, strengthened commercial position, and progress towards operational milestones.
• Customers: Enhanced ability to meet growing demand for battery-grade lithium carbonate through a secured and sustainable North American supply chain.
• Suppliers (Prairie Lithium): Establishes a partnership to supply high-quality lithium feedstock for the U.S. market, validating their project's resources.
• Creditors/Investors: Unlocks access to new financing avenues, including project-level debt and equity, potentially increasing investment opportunities.

Next Steps

• Negotiation and execution of a definitive agreement with Prairie Lithium.
• Final Investment Decision (FID) for the Muskogee lithium processing facility.
• Commencement of major construction at the Muskogee site.
• Continued collaboration with multiple producers and developers to aggregate feedstock.
• Initial deliveries of lithium chloride from Prairie Lithium expected as early as 2027.

Key Dates

Recommendation

The non-binding Letter of Intent represents a significant positive step in securing critical feedstock and de-risking Stardust Power's operations, which could attract further investment. However, the non-binding nature means the definitive agreement is not yet finalized, warranting a "Hold" until the agreement is firm and its terms are fully disclosed.

Keywords

Lithium supply, Lithium carbonate, Battery-grade lithium, Feedstock agreement, Prairie Lithium, Stardust Power, Muskogee refinery, North American supply chain, Critical minerals, Lithium chloride